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SEC Holds ‘Rare’ Joint Conference Call with Spot Bitcoin ETF Applicants
- Bitcoin spot ETF approval likely by January 10th after compromise on in-kind redemptions.
- Cash settlements replacing in-kind redemptions means ETF holders won’t be able to swap shares directly for BTC.
- This compromise offers market access for traditional finance but reduces freedom and utility for some investors.
The impending spot Bitcoin ETF has been the talk of the crypto community for the best part of six months, and it appears that approval is just around the corner. The epic saga toward an ETF agreement has had so many twists and turns that you’d be forgiven for thinking it was a Star Wars film and not a relatively straightforward financial negotiation. But, after months of toing and froing, the Securities and Exchange Commission (SEC) and the various TradFi institutions filing for a spot ETF have finally reached a compromise. In whose favour? That’s for you to decide.
SEC Will Not Budge on In-Kind ETFs
The SEC reportedly held a ‘rare’ conference call with the major spot ETF applicants – think BlackRock and Grayscale – over the past few days to iron out a few details. According to BitcoinArchive, the major sticking point was that all spot Bitcoin ETFs must ‘remove any reference to “in-kind” redemptions from their filings. “Cash creates” only.’
And after weeks of discussions, apparently BlackRock and other institutions applying for a Bitcoin ETF have yielded and agreed to the SEC’s terms. Thanks to the most recent meeting, the American financial regulators are now set to announce their decision by January the 10th, which appears very likely to be a ‘Yes, you may list Bitcoin spot ETFs’. It’s likely the introduction of a Bitcoin fund will spur a wave of crypto-based publicly-traded funds, with Ethereum set to be the next cab off the rank.
What Does This Mean for ETFs?
A key appeal of the spot Bitcoin ETF vision was in-kind redemptions. It essentially solved the storage issue for TradFi or wary investors who didn’t want to mess about with crypto wallets or exchanges. Instead, they could use a finance manager like BlackRock to store BTC on their behalf, and if they ever wanted control over their coins, they could simply redeem one share of the ETF for one BTC.
However, the SEC’s compromise strips ETF holders of the core financial freedom that is meant to come with cryptocurrency. Investors and fund managers will have to use cash to buy, sell and redeem their shares, and turn to traditional exchanges like Swyftx or Binance to attain real ownership of BTC.
For some, this compromise removes much of the freedom and utility that a BTC ETF was meant to provide. For others, it is a necessary evil to allow an influx of money from traditional finance to enter the market – as they argue those who really want to redeem for BTC will just buy it from a crypto exchange anyway.
And for some… well, I’ll let the tweet do the talking:
Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
